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Origination News | Lender Ranking | Fundings by Lender | Statistics
Quarterly residential mortgage production by lender. Subprime, Alt-A, home equity and conforming originations. Volume by quarter since 2003.

Fundings Fall as Flagstar Repositions Mortgage Biz

Q4 originations decline 17% from Q3

Jan. 23, 2014

By Mortgage Daily staff

Residential loan production at Flagstar Bancorp Inc. was off on a quarter-over-quarter basis and sank on a year-over-year basis. The company significantly cut its servicing portfolio and announced significant staff reductions.

From Oct. 1 through Dec. 31, mortgage originations were $6.439 billion, according to earnings data reported Thursday.

Business slowed from $7.737 billion three months earlier and plummeted from $15.357 billion 12 months earlier.

Flagstar attributed the decline primarily to a drop in refinance originations. Refinance share fell to 42.9 percent from the third quarter's 52.4 percent.

In-house retail originators generated just $0.296 billion of the latest activity, while $1.591 billion was originated through mortgage brokers and $4.548 billion was acquired through the correspondent lending channel.

Full-year 2013 mortgage production was $37.482 billion, declining from $53.587 billion the prior year.

Fallout-adjusted locks dropped to $5.3 billion for the fourth quarter 2013 from $6.6 billion in the prior three-month period.

Reflecting the sale of mortgage servicing rights on around $40.7 billion in Fannie Mae and Ginnie Mae loans to Matrix Financial Services Corp., the total servicing portfolio plunged to 159,482 loans for $30.118 billion from 400,339 loans for $78.927 billion three months earlier. A year earlier, Flagstar serviced 409,807 loans for $82.900 billion.

The latest total included 131,413 loans for $25.743 billion in third-party servicing, plunging from 377,210 loans for $76.821 billion at the end of 2012.

There were $2.509 billion in residential first mortgages on the balance sheet as of the end of last year. First mortgage holdings grew from $2.479 billion three months earlier but contracted from $3.009 billion a year earlier.

Second mortgage holdings were trimmed to $0.170 billion from $0.174 billion in the prior quarter. But Flagstar built up its second mortgage portfolio from $0.115 billion as of the fourth-quarter 2012.

Home-equity lines of credit owned by Flagstar fell to $0.290 billion from $0.308 billion but have grown from $0.179 billion at the same point in 2012.

The balance sheet included $0.424 billion in warehouse lending assets, increasing from $0.390 billion in the third quarter but slashed from $1.348 billion at the end of 2012.

The investment portfolio also included $0.409 billion in commercial real estate loans. CRE assets fell from $0.421 billion the prior quarter and sank from $0.640 billion the prior year.

After receiving 635 repurchase demands in the fourth quarter, the repurchase pipeline finished December at $97 million, tumbling from $224 million at the end of 2012.

The Troy, Mich.-based company reported a $248 million loss before taxes, swinging from a $14 million profit in the third quarter and worsening from an $89 million loss in the fourth-quarter 2012.

"Despite the near-term impact of initiatives designed to position the company for long-term success, as well as a challenging mortgage market, we delivered net income of $261 million for the year and drove a 28 percent increase in book value per share from 2012," Flagstar President and Chief Executive Officer Sandro DiNello said in the report.

The number of full-time employees was reduced to 3,253 from 3,428 at the end of the third quarter. At the end of 2012, headcount stood at 3,662.

Included in the staffing total were 359 loan officers and account executives, the same as of Sept. 30 and more than 334 as of Dec. 31, 2012.

Last week, Flagstar disclosed that it would be eliminating around 600 mortgages jobs.

"While a decision to restructure the organization is never taken lightly, the cost savings from the workforce reductions, together with those already realized from our vendor management and procurement initiatives, the outsourcing of default servicing and other variable cost decreases, put us on track to achieve the high-end of our previously provided guidance for 2014 of $145 million to $190 million in annualized non-interest expense savings," Flagstar Chief Operating Officer Lee Smith explained in the earnings report.

Flagstar operated 39 loan origination centers as of last month, six fewer that in September.

The number of bank branches was 111, the same as at the end of the third quarter.

Flagstar profile

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